ASIC takes former Rio Tinto executives to court over Riversdale

The corporate watchdog has started legal proceedings against Rio Tinto's former chief executive Tom Albanese and chief financial officer Guy Elliott for misleading and deceptive conduct over the accounting of the company's disastrous $US3.7 billion Riversdale coal acquisition.

The Australian Securities and Investments Commission (ASIC) said on Friday that the two former executives engaged in "misleading and deceptive" conduct by misrepresenting the nature and standard of Riversdale's Mozambique coal assets in the annual report that Rio published in March 2012.

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"ASIC alleges that (Rio) engaged in misleading or deceptive conduct by publishing statements in the 2011 annual report, signed by Mr Albanese and Mr Elliott, misrepresenting the reserves and resources of (the Mozambique assets)," said ASIC in a statement.

"Further, by allowing (Rio) to engage in such conduct, Mr Albanese and Mr Elliott failed to exercise their powers and discharge their duties with the care and diligence required by law as directors and officers of (Rio).

"ASIC has sought from the Court pecuniary penalties against Mr Albanese and Mr Elliott and that they be disqualified from managing corporations for such periods as the Court thinks fit."

Rio had hoped to develop a major coking coal operation in Mozambique through the Riversdale acquisition, but its plans fell apart when its preferred method of transporting the coal to market, barging down the Zambezi River, was blocked by the Mozambique government.

The quality and size of the coal resource acquired also turned out to be poorer than originally thought. Rio eventually recorded a $US2.86 billion impairment against the Mozambique assets in February 2013, shortly after sacking Mr Albanese.

In a letter to shareholders published before the ASIC charges on Friday, Rio's outgoing chairman Jan du Plessis said the Mozambique saga was "undoubtedly a low point" of his time at the helm.

The Mozambique issue came to a head when an internal whistleblower, former Rio executive Preston Chiaro, approached chairman Jan du Plessis with concerns about the accounting of the Mozambique assets in late 2012.

Statistics published by Rio on Friday show that the number of whistleblower claims from within the company continues to rise, with 712 claims made in 2017, up from 674 claims in 2016.

The number of claims in 2017 was higher than in any previous year, and came despite Rio's total employee numbers sliding year on year. Rio said 33 per cent of those whistleblower claims were substantiated.

The development of alternative supplies of critical minerals, as well as other joint efforts by Australia and the United States to address Chinese influence in the region, will dominate talks in Washington.